The property rental market in Poland is still very unpopular. At the turn of 2015/2016, only about 5 percent of Poles decide to rent an apartment for investment purposes, so the market still has great, unused potential.
Since the beginning of 2016, investors are increasingly deciding to buy real estate for rent, as the interest rate on other investment options available on the market is very low. According to the National Bank of Poland, the average interest rate on deposits in 2015 was about 2 percent.
Landlords can expect a profit of 3.5-5 percent when renting a property. This is a profit even twice as high as in the case of deposit proposals. When deciding on this form of investment, however, you must take into account the risk that this solution brings.
Rent an apartment and a loan to buy it
An important aspect to consider is the comparison of the cost of the loan with the profit generated from renting the property. The most common way to buy a flat today is to buy a flat with a mortgage.
Example: when taking a loan in the amount of USD 300,000, you should take into account the installment amount of approximately USD 1,300. The average cost of renting the entire apartment (depending on location) is around USD 2,000. In summary, it often happens that the loan installment is repaid with the proceeds from rent.
In addition, you can count on an additional profit of about USD 300. Any income obtained through the provision of housing must also include fixed costs in the form of rent, which in most cases must be borne by the investor.
Interest in the market
In 2016, the greatest interest in investing in real estate for rent is in Warsaw. Small apartments are the most sought after. In July this year, popular studios could not be rented immediately, which indicates very high demand. In the second quarter of 2016, there was a clear increase in interest in renting real estate, which proves that Poland is entering a level that was reached in other European countries about 20 years ago.
Statistics say that currently, around 5 percent of Poles rent real estate for investment purposes, while in other countries, such as Germany or Switzerland, 30 or even 50 percent of the population chooses this form of investing.